Ok had this idea the other day at work.
Chrysler Group LLC have several Division including : Chrysler, Dodge, Jeep, Ram and Mopar.
Now theoretically Chrysler Group is having a couple of poor years and decide to try raise some cash so place Dodge and all its assets for sale or Auction.
I come along and buy it which automatically adds Dodge as a new Division to my company. I can start building cars previously licenced to Dodge.
I was trying to think about how divisions would work in the grand scheme of things :
Say my base company is called “Good cars” and my newly acquired Division “Dodge”. I begin producing crap cars with Dodge so reputations falls, however there should also be a negative effect on “Good cars” probably not as drastic for example :
Dodge rep drops by 50%
Good cars drops by 15%
This would add a benefit to having divisions, however we don’t want a new division for every single new car as it reduces the overall risk by too much.
So negatives to setting up divisions could be :
High start-up costs (legal fees, branding fees ect)
Reduced overall loan ability (the amount of loan you can take out is per division instead of overall company)
Loss of customer loyalty if rebranding currant cars.
Some more positives :
Ability to sell a division with pre-selected cars and engines.
Ability to take loans on divisions rather than entire company.
Reputation can be spread out
Splits a large company up into managable chunks.
Another point
Would mergers be considered for example Chrysler Group LLC is heading into administration so my company Good cars merges with Chrysler Group LLC taking on their debt but gaining there assets ?
Mergers are a great concept as it can completly change the game, another example would be your company dominates the world market
Your company : 40%
company 1 : 5%
company 2 : 5%
company 3 : 20%
company 4 : 20%
At this point you would appear unstoppable but company 3 and 4 agree on a merger which increases the pressure on your company.
And thats it so far lol. sorry for the long read and if its been posted